This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

Mortgage fraud victory

By Dale Anne FreedStaff Reporter

Wed., Feb. 7, 2007

She was David pitted against Goliath, an embattled Toronto widow who took on the system and won.

Susan Lawrence won back her 100-year-old home, stolen from her on paper by identity fraudsters, when the province's highest court, in a rare move, reversed its own decision on a previous mortgage fraud.

"This is a victory for every person who owns property in Ontario," an ecstatic Lawrence, 55, told the Star yesterday from her west-end home.

Lawrence, who works in sales, received an eviction notice from Maple Trust Co. last March at the two-storey Victorian house she had lived in for 28 years. But she was never forced to leave.

"In this particular case, I think common sense has prevailed," she said.

Article Continued Below

An impostor posing as Susan Lawrence transferred the home to another impostor calling himself Thomas Wright, who in turn obtained a $291,924 mortgage from Maple Trust. The property ownership was transferred to Wright, and Maple Trust registered its mortgage against the property.

Yesterday, a panel of five judges in the Court of Appeal released a unanimous decision favouring the victimized homeowner and ordering Maple Trust to pay $25,000 toward her legal costs.

Justice Eileen Gillese summarized the case and her judgment in a nutshell: "Ownership of a person's home is fraudulently transferred. The property is then mortgaged. In a contest between the two innocent parties – the homeowner and the lender of the mortgage monies – who wins? This appeal answers that question in favour of the homeowner."

"The case is really the end of Susan's fight – that she and innocent homeowners should not be responsible for mortgage fraud," her lawyer, Morris Cooper said.

Lawrence had asked the court to reverse itself on the decision it made in the 2005 "Household Realty" case awarding rights to the mortgage company, which set the precedent for her legal predicament.

The publicity surrounding Lawrence's case "created a perfect storm of public opinion that resulted ultimately in the Legislature of Ontario amending the law last fall," Cooper said.

After media attention raised public ire about people victimized in similar ways, the province entered the fray, intervening to support Lawrence's bid to get the decision overturned.

Article Continued Below

And it backed that up by amending Ontario's Land Titles Act to clarify its intent, Government Services Minister Gerry Phillips said. "I'm pleased that the court confirmed our view that homeowners should not be subject to fraudulently obtained mortgages."

The amendment is meant to ensure that victimized homeowners get their land title restored and fraudsters have their documents declared invalid.

Phillips said that with "the combination of the court case and our legislation, I think homeowners can sleep fairly well."

The legislation is already retroactive from the day it passed, "but this court case clarifies anything that may have happened before that date," Phillips said.

Cooper said that in the Household Realty case, the appeal court "had made a legal decision that they now realized was wrongly decided."

"That's pretty rare, to say the least," he said. "Susan deserves a great deal of credit for having the courage to decide to appeal."

The scam took place Nov. 21, 2005, two days before Lawrence made her own deal to sell the house with a long closing period.

She learned she'd been victimized two months later. "I went in to get a mortgage on a new property I was buying and the bank told me the one I had wasn't mine," Lawrence said. She had never met the fraudsters and no arrests have ever been made.

The loan officer thought it was a clerical error and not to worry. About a week later she called me and said, `Sit down,' and broke the news."

The legal battle began when Maple Trust tried to evict Lawrence and focused on whether the company had a valid mortgage.

"That's why the story became so huge," Cooper said. "How could a mortgage company evict you from your house on a mortgage you had nothing to do with and knew nothing about?"

The case went to court last June.

"The judge was sympathetic to Susan but said he was bound by the previous Court of Appeal decision and that he couldn't do anything about it," said Cooper. "We appealed and got it in front of the Court of Appeal in November."

After Lawrence's story broke, lawyers began advising clients to buy land title insurance to protect themselves.

"Before the legislative amendment, homeowners' fear of finding themselves in Susan Lawrence's position was a major impetus for title insurance being sold," said Cooper. "This has obviously been lessened because of the change in the law."

Lawrence said she still plans on buying title insurance on her property, which runs about $350 to $1,000.

"For the most part, getting it is not an urgent necessity," Cooper said. "But for a modest fee title insurance protects you if land title problems should arise."

More from The Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com